RE: I totally agree about the Trust marketMp3
Why does our Government screw up everything that was working? Is that their job?...elect a screw-up with a 10mm wrench on a 15mm bolt!
Why were REIT's exempt? What? Reduce the GST by 1% and some jerk will find a way to reclaim it! It's called balancing the books to pay for people who don't justify their pay or pensions!
My apologies, I just got off the phone with a telemarketer....but she didn't phone anybody else for a 1/2 hour!
Cheers...you too Rigpig.
"Good Afternoon,
Halloween lived up to its scary reputation this year with the Canadian government's announcement of a new tax structure for income trusts.
Not only did the Finance Minister, Jim Flaherty, show incredible bravery in the announcement....he also created an interesting trading environment for Investment Advisors
to introduce their kids to their work on today's National Take your Kid to Work Day. My son may take a pass on the financial services industry.
Mr. Flaherty's decision to level the playing field between corporations and trusts was the most aggressive option that he had to his disposal. Trusts will now be taxed as corporations,
thereby removing a lot of their preferential tax treatment and premium valuations relative to corporations. The most recent announced trust conversions of BCE and Telus were the straw that broke the camels back.
With the government fearing the big banks converting next, they had to act. The severity of their actions is the big surprise. While it may have been necessary to stem the trusting of corporate Canada, the short term ramifications are resulting in 10-20% sell-offs in many trust portfolios. The following article summarizes the issues:
https://www.theglobeandmail.com/servlet/story/LAC.20061101.REGULY01/TPStory
We suspect that these tax modifications will have the biggest negative affect on energy trusts and business trusts, as their after tax distributions could be affected the most. As we gather more data,
there may be a good argument to add to some individual trust names whose after-tax distributions will not be affected as dramatically. REIT's and Pipeline Trusts may be sectors to watch. The Melhoff Group
believes that this will also put downward pressure on the Canadian dollar and interest rates. Ironically, investors may be aggressively bidding up sustainable trusts in 2007 as they search for yield in a declining interest rate environment. The fact remains that these tax changes are not enacted until 2011 on most trusts.
Please find attached our Monthly World Market Report for November 2006 and a couple corporate updates on these proposed tax changes. The MWM Report recommendations may have to be taken with a grain of salt after the changes this AM. The comments on interest rates are by our Director of Capital Markets are quite appropriate.
We will forward more info on the trust market changes as we gather more data on specific company impacts."
There are alot of people cleaning their shoes tonight.